How does the Brexit maelstrom end: Deal, no Brexit or crash?

LONDON (Reuters) - The United Kingdom’s exit from the European Union is uncertain nearly three years since the 2016 Brexit vote.

British Prime Minister Theresa May addresses a news conference at the EU summit in Brussels, Belgium, June 23, 2017. REUTERS/Francois Lenoir

Most diplomats and investors think the United Kingdom faces three main options: leaving with a divorce deal, throwing the question back to the people or crashing out without a deal.

To see a graphic of no-deal Brexit probabilities from major banks: here

Following are the main scenarios:

1) BREXIT WITH A DEAL - May gets her deal approved at a third, or even fourth, attempt and the United Kingdom leaves in an orderly fashion.

May’s divorce treaty, the product of more than two years of tortuous negotiations with the EU, was defeated by 149 votes on March 12 and by 230 votes on Jan. 15.

She may try again next week.

She told lawmakers that unless they approved her Brexit divorce deal, Britain’s EU exit could face a much longer delay than three months.

To get it through parliament, she must win over dozens of Brexit-supporting rebels in her own Conservative Party and the Northern Irish Democratic Unionist Party (DUP) which props up her minority government.

The DUP said it had good talks with British ministers on Friday to see what additional assurances would be needed for them to save her deal.

If she fails next week, there is even talk she could come back for a fourth vote. May could seek to get last-minute concessions at a March 21-22 EU summit.

The EU has repeatedly said it is the only deal on the table and that it will not reopen it.

Many banks and investors still say a last-minute deal could be struck and approved, and cite previous EU crises such as the Greek debt crisis where solutions were found at the eleventh hour.

Goldman Sachs sees a 60 percent chance that May’s deal, or a variant of it, is eventually ratified. It sees the probability of a second referendum at 35 percent and a no-deal exit at 5 percent.

If May’s deal fails, another option is that parliament at some point takes control of Brexit and lawmakers seek a closer relationship with the EU, staying in the EU customs union.

Lawmakers could seek indicative votes on a way forward and there might be a majority for a softer Brexit than May’s deal.

2) BREXIT REFERENDUM - May’s deal fails and a long delay allows the campaign for another referendum to gain momentum.

It is far from clear how the United Kingdom would vote if given another chance.

An often chaotic set of votes in parliament this week has shown that none of the alternatives to May’s deal - such as leaving with no deal, a referendum or allowing parliament to decide how to leave - can muster a majority among lawmakers yet.

In the June 23, 2016 referendum, 17.4 million voters, or 51.9 percent, backed leaving the EU while 16.1 million, or 48.1 percent, backed staying.

While many surveys ahead of the vote incorrectly predicted that the United Kingdom would vote to stay in the club it joined in 1973, polls now suggest no great desire for a second referendum and indicate that many voters, fatigued by the political squabbling, would be happy to leave without a deal.

Corbyn, who voted against membership in 1975 and gave only reluctant backing to the 2016 campaign to remain in the EU, has given ambiguous backing for another referendum, saying he would push for one alongside a national election.

At the highest levels of government, there are worries that a second referendum would exacerbate the deep divisions exposed by the 2016 referendum, alienate millions of pro-Brexit voters and stoke support for the far-right.

If Britons voted to remain, Brexit supporters might demand a third and decisive vote.

A new party backed by Nigel Farage, the insurgent who helped shove Britain towards the EU exit, has a message for the country’s leaders: The foundations of the political system will explode if Brexit is betrayed.

3) NO-DEAL EXIT - The chaos in London is such that it cannot find a way to approve May’s deal or find another divorce deal option and after one or more delays, the EU says it will extend no longer. The United Kingdom then leaves without a deal.

The British parliament on Wednesday voted 321 to 278 in favour of a motion that ruled out a potentially disorderly “no-deal” Brexit under any circumstances.

While the approved motion has no legal force and ultimately may not prevent a no-deal exit, it carries considerable political force, especially as it passed thanks to a rebellion by members of May’s own Conservative Party and her cabinet.

Still, as the March 29 exit date is set in law, the default is to leave on that date unless May agrees a delay or parliament changes the law.

“By the end of March we have to have an alternative in place, not just a resolution of the House of Commons, a preference, but a solution in place that enables us to have an extension so there isn’t crash out on March 29,” May’s de-facto deputy David Lidington said.

While that would avoid a no-deal exit on March 29, the risk would remain a delayed exit date if the British parliament was unable to approve a deal.

And the European Union’s 27 other members must unanimously approve a delay to Brexit.

Brexit Secretary Steve Barclay said Britain should not be afraid of leaving without a deal if it cannot get a divorce deal approved.

“If we can get the deal through as I hope we still will, we will now need a short, technical extension, but if not we shouldn’t be afraid to leave with no deal,” Barclay told the BBC.

No-deal means there would be no transition so the exit would be abrupt, the nightmare scenario for international businesses and the dream of hard Brexiteers who want a decisive split.

Britain is a member of the World Trade Organization so tariffs and other terms governing its trade with the EU would be set under WTO rules.